Ocwen Files New Fraud Claims Against FIS

In 2017, Ocwen Financial Corporation[1] had filed a lawsuit in the California Superior Court alleging that Fidelity Information Services LLC[2] (FIS) had inflated its monthly rate and charged Ocwen for a variety of expenses while serving as its monitor for a 2015 mortgage servicing settlement case for the California Department of Business Oversight (DBO).

Now, the servicer has filed an amended complaint that includes new fraud claims and also adds Fidelity National Information Services Inc, the parent company of FIS, as a defendant to the lawsuit after FIS produced documents showing that Fidelity National not only knew about the fraud but facilitated it in order to “boost” revenue. In this 59-page amended complaint, Ocwen said that Fidelity National benefitted from the additional revenue that FIS procured by fraud through its ownership of FIS.

"Since Ocwen’s original filing in May 2017, discovery, in this case, has established that Fidelity Information Services’ (FIS) misconduct was much worse and more pervasive than Ocwen ever imagined. Our amended complaint adds new fraud claims and names FIS’s parent company, publicly-traded Fidelity National Information Services (Fidelity National), as a defendant," John Lovallo, Ocwen's spokesperson told DS News. "Fidelity National not only knew about the fraud, but facilitated it to increase their financial performance. Ocwen will continue to vigorously pursue all remedies stemming from FIS’s fraudulent and abusive billing scheme to hold FIS and Fidelity National fully accountable for their actions."

According to the new complaint that was filed by Ocwen with the California Superior Court recently, though FIS had told the DBO that it would review 50,000 loan files over a two-year engagement, it utilized the $44.8 million charged for the audit in 11 months while reviewing less than 50,000 loan files and then asking for an additional sum to re-work on those files.

Giving further proof to its original complaint of inflated billing by citing internal FIS documents, the new complaint alleged that "FIS did not have any of the staff, technology, or state/fed resources as represented to the DBO." The complaint, citing an FIS executive, states that when FIS made these statements and were awarded the project, the company did not have any of these things in place.

Additionally, the FIS executive allegedly said that the company had no checklists. "There were instead a limited number of generic . . . items . . . and no research materials or resources that were state-specific at all for California.” And, “No technology tool existed for mortgage loan servicing review and examinations," Ocwen said in its fresh complaint.

The original lawsuit had claimed that whenever Ocwen questioned the legitimacy of FIS' invoices or "confronted the company about their increasing enormity, FIS reiterated its misrepresentations that the hours and expenses reflected on the invoices were legitimately worked and incurred."

However, the new complaint cites that FIS fraudulently billed Ocwen for extensive re-work resulting in "massive work and time charges that had zero value." The complaint, which cites written admissions by FIS senior managers says that FIS hid both the original faulty work and the subsequent re-work and charged Ocwen for both.

The complaint documents admissions from FIS executives that the company lied to the DBO about its "purported Ocwen findings and its billing practices.